Investors have poured US $45bn of orders into an expected US $8bn acquisition finance bond for consumer industrials company Newell Rubbermaid, a banker on the deal told IFR on Friday. After pulling in pricing by about 40bp through the bookbuilding process, the company looks set to price the bond through its outstanding curve. Bankers both on and away from the deal said the new issue concession was negative 8bp-15bp. "It's a really good print and highlights the strong demand for M&A supply," said one of the bankers.
The deal's three-year tranche is now guided at T+160bp, the five-year at T+185bp, the seven-year at T+220bp, the 10-year at T+235bp, the 20-year at T+270bp and the 30 year at T+285bp. One investor said he liked the 30-year, but that the pricing levels on all other tranches were not attractive enough. "We like the story. I think everyone does," he said. "It's a longer-term, couple of years deleveraging trade." He said the pricing on the 30-year at guidance of T+285bp was still offering much higher spreads than other consumer companies like foodservice distributor Sysco.
Sysco's 4.85% 2045 bond is trading around G+193bp, according to Trace, which is 92bp inside where the new Newell Rubbermaid 30-year is likely to price. Sysco held calls with investors on Thursday for a potential bond issue, and the investor expects the deal to surface on Monday. Texas-based Sysco backed its US $3.1bn acquisition of European foodservice company Brakes Group from private equity group Bain Capital with a ?1.725bn (US $2.4bn), 364-day bridge loan, according to a filing. The senior unsecured term loan was initially provided by sole lead arranger and sole bookrunner Deutsche Bank. Sysco will pay around ?2.2bn for Brakes, including the repayment of around US $2.3bn of Brakes debt.
Sysco is rated higher than Newell Rubbermaid at A2/A-, but the investor sees leverage rising at Sysco on the back of more potential acquisitions. "One company is going one way, and one another," said the investor of Newell and Sysco. Newell Rubbermaid, the maker of Sharpies and Parker pens, is rated at the very lowest rung of investment grade at Baa3/BBB-/BBB-.
As a result it is offering investors some protection in the event of a downgrade, providing a commitment to increase the interest paid on the debt in such an event - another bonus for the buyside. Newell's six-part US dollar bond will finance its acquisition of Jarden Corp. Lead managers Citigroup, Goldman Sachs, J.P. Morgan and Royal Bank of Canada expect to price the bond Friday.